The number of underwater mortgage borrowers is still steadily declining, market-research firm CoreLogic said. And that’s another positive sign for housing.
Roughly 100,000 more borrowers hit positive equity during the third quarter of 2012, bringing the number of borrowers who have resurfaced out of negative equity to 1.4 million borrowers, according to CoreLogic. That means they no longer owe more on their mortgages than what their homes are worth.
However, a still large 10.7 million, or 22%, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2012. That number is down from 10.8 million properties, or 22.3%, at the end of the second quarter of 2012, CoreLogic said. What’s also not great—an “additional 2.3 million borrowers had less than 5% equity in their home, referred to as near-negative equity, at the end of the third quarter,” CoreLogic said.
So put together, “negative equity and near-negative equity mortgages accounted for 26.8% of all residential properties with a mortgage nationwide in the third quarter of 2012,” down fractionally from 27% at the end of the second quarter in 2012, the research firm said.
As for the total dollar amount of the value of homes currently underwater nationwide, “negative equity decreased from $689 billion at the end of the second quarter in 2012 to $658 billion at the end of the third quarter, a decrease of $31 billion,” it said
“Through the third quarter, the number of underwater borrowers declined significantly,” said Mark Fleming, chief economist for CoreLogic, in a statement. “The substantive gain in house prices made in 2012, partly due to tight inventory caused by negative equity’s lock-out effect, has paradoxically alleviated some of the pain.”
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007 and is the author of Skirting Heresy: The Life and Times of Margery Kempe (Franciscan Media, June 2014).
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.